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French employer group calls for shock therapy

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Francois Hollande

Francois Hollande

REUTERS

Francois Hollande

France should scrap its 35-hour work week, raise the legal retirement age and lower the minimum wage if it hopes to bring down chronically high unemployment and stimulate growth, the country's main employer group said yesterday.

Ibec equivalent Medef said that if implemented, its proposals would help Europe's second-largest economy create 1 million jobs over the next five years. France's unemployment rate is stuck above 10pc, with nearly 3.5 million job seekers registered in July.

Unions reacted with outrage earlier this month when some of the proposals were leaked in local media, prompting Socialist Prime Minister Manuel Valls to urge all parties to steer clear of "provocations".

But Medef chief Pierre Gattaz said he was ready to accept controversy to spark a proper discussion about what is holding back the French economy.

"We accept that risk because it's our future together that is at risk," he wrote in an introduction to the pamphlet, noting some proposals "will certainly seem aggressive or exaggerated to some people".

President Francois Hollande has introduced some measures aimed at stimulate hiring since his May 2012 election, including offering €40bn of income tax and PRSI cuts to firms, a modest easing of hire-and-fire rules and job training reforms.

But such moves have yet to yield firm results. Unemployment has continued to edge up despite reforms and thousands of subsidised jobs, while growth stagnated in the second quarter and business activity slowed in September.

France's lacklustre economic recovery, which has lagged euro zone peers and meant France has missed targets to reduce its public deficit, has raised pressure on a deeply unpopular Hollande to reform harder and faster.

German Chancellor Angela encouraged Mr Valls to push ahead with reforms during his visit to Berlin on Monday and ECB chief Mario Draghi said earlier "the risk of doing too little is higher than the risk of doing too much.

Mr Hollande's government is set to introduce a law loosening rules that limit competition in regulated professional sectors and has flagged a move easing rules on thresholds for worker representation that companies say put a brake on hiring.

Yet Mr Gattaz pressed him to go further and end the 35-hour work week introduced by a Socialist government in 2000, allow firms to go around the €1,445 monthly minimum wage, scrap two of 11 bank holidays and authorise exploration for shale gas.

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